After a drawn out court battle with its biggest customer, a local company has thrown in the towel.
Bay Harbor Professional Services, a three-year-old IT staffing firm that lived and died by its contract with its biggest customer, Capital One, filed for Chapter 7 bankruptcy liquidation Tuesday.
Bay Harbor, which also previously did business as Staff Focus Consulting, had a contract with Capital One to provide IT staffing and consulting services.
At one point, Bay Harbor was bringing in nearly $18 million a year in revenue, according to its attorney, Chris Gatewood, most of which came from its contract with Capital One.
But Bay Harbor was sued in November 2011 for $700,000 over an alleged breach of contract after it refused to pay Capital One certain rebates that were provisions of their contract.
The two sides went back and forth in Henrico County Circuit Court, and Bay Harbor eventually countersued for millions. The litigation ended late last year. A jury ultimately awarded no damages to Bay Harbor, and it had to pay Capital One a portion of the disputed rebates, roughly $200,000.
“In our view, the result we got at trial wasn’t the right one, and Bay Harbor wasn’t able to backfill to replace the loss of the client,” said Gatewood, whose firm is Threshold Counsel in Chesterfield.
“It’s unfortunate, but for companies that aren’t very old and have built their success on one or two small relationships, if one goes south particularly in a disruptive way, some companies don’t always make their way out,” he said. “They were trying to get new clients but just couldn’t do it fast enough.”
Bay Harbor, founded by James Simmons, had been headquartered 4198 Cox Rd. in Innsbrook. Phones at its office have been disconnected.
At its peak, the company had nearly 200 workers embedded at clients like Capital One and had about 20 employees at its headquarters, Gatewood said.
Bay Harbor’s initial Chapter 7 filings lists between one and 49 creditors. It lists assets of no more than $50,000 and liabilities of $1 million to $10 million.
It was sued in late December by Richmond Green Properties. A confessed judgment was issued against Bay Harbor last month for $738,000.